What is Substantial Gainful Activity in Disability Law?

In disability law, Substantial Gainful Activity (SGA) refers to a person’s ability to engage in work that provides significant earnings. It is a key factor in determining whether an individual qualifies for disability benefits from the Social Security Administration (SSA).

Therefore, Substantial Gainful Activity (SGA) is a key concept in U.S. disability law. The Social Security Administration (SSA) uses it to determine whether an individual is eligible for disability benefits. SGA is work that is both substantial (involving significant physical or mental activities) and gainful (done for pay or profit, or of a type normally done for pay or profit).

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Factors in Determining SGA

While monthly earnings are the primary factor in determining SGA, the SSA may also consider other aspects of an individual’s work activity, including:

• Work Expenses: Impairment-related work expenses can be deducted from earnings when calculating SGA. These expenses may include assistive devices, transportation, or medical treatments necessary for work.
• Subsidies: If an employer provides special accommodations or extra support to help an individual with a disability work, the value of these subsidies may reduce earnings for SGA purposes.
• Unsuccessful Work Attempts: Brief periods of work (usually less than six months) that end due to the disability may not count as SGA. This factor recognizes that a person with a disability may attempt to work but can’t sustain the activity due to their impairment during this time.

Exceptions and Special Considerations

There are some exceptions and special considerations in applying SGA:

• Trial Work Period: Beneficiaries can test their ability to work for up to nine months without losing benefits, regardless of earnings. This allows individuals to explore work opportunities without jeopardizing their disability benefits.
• Volunteer Work: While unpaid, volunteer work demonstrating an ability to perform substantial work may be considered SGA.
• Self-Employment: For self-employed individuals, the SSA considers factors beyond earnings, such as time spent working, the nature of the work, and how the work compares to that of unimpaired individuals in similar businesses.
• Blind Individuals: The SGA limit is higher for blind individuals. Also, SGA rules don’t apply to blind individuals receiving SSI benefits.
• Non-Work Income: The SSA disregards income from non-work sources (e.g., investments, gifts, inheritance) when calculating SGA.
• Criminal Activity: Earnings derived from criminal activity are included when assessing SGA. However, this factor is usually not considered unless the person is making a substantial income from the activity.

Substantial Gainful Activity (SGA) and Self-Employment

The Social Security Administration (SSA) uses specific guidelines to determine if a self-employed person’s work constitutes Substantial Gainful Activity (SGA), which can impact their eligibility for disability benefits.

Countable Income

The SSA’s assessment hinges on “countable income,” which reflects the actual value of work a self-employed individual performs.

To calculate countable income:

• Begin with the net earnings from self-employment (NESE).
• Subtract the value of any assistance, items, or expenses that are allowable deductions.
• The remaining amount represents the countable income.

Evaluation Methods

The SSA employs different methods to determine if self-employment work rises to the level of SGA:

• Countable Income Test

This test is primarily used for initial disability applications or during the first 24 months of receiving benefits. If the countable income surpasses the SGA threshold ($1,620 per month in 2025 for non-blind individuals), the work is considered SGA, and the individual may not be eligible for benefits.

• Three Tests

If the Countable Income Test doesn’t definitively indicate SGA, the SSA applies three additional tests:

• Significant Services and Income Test: This test evaluates whether the services provided to the business are significant and if the income generated is substantial.
• Comparability Test: This test compares the individual’s work activity to that of unimpaired individuals in similar businesses to determine if their work is comparable.
• Worth of Work Test: This test assesses whether the value of the work performed exceeds the SGA amount. Refer to the SSA’s program operations manual (POM) to learn if you qualify.

Income Averaging

Since self-employment income can fluctuate, the SSA often averages the countable income over the period worked. This is done by dividing the total countable income by the number of months in that period to determine the average monthly earnings for SGA comparison.

Special Considerations

• Fluctuations: The SSA acknowledges that self-employment income can vary due to business conditions, changes in operations, or economic downturns.
• Separate Periods: When comparing monthly countable income to SGA thresholds, the SSA may consider periods with significant changes in work patterns or income separately.
• Non-Income Factors: For self-employed individuals, the SSA considers factors beyond just earnings, such as the nature and extent of the work activity and how it compares to the work of unimpaired individuals in similar businesses.
• Deductions: The SSA may deduct certain expenses when calculating countable income, such as Impairment-Related Work Expenses (IRWEs), Unincurred Business Expenses, and the Value of Unpaid Help from friends, relatives, or professionals.
• Reporting: Self-employed individuals should accurately report their earnings and work hours every month to the SSA.

Key Point: The SSA’s goal is to accurately assess whether a self-employed person’s work activity constitutes SGA by considering a range of factors beyond income. This determination is critical in deciding eligibility for disability benefits.

SGA and the Importance of Understanding the Rules – Review Your Situation with a Disability Attorney

Understanding SGA is vital for anyone applying for or receiving disability benefits. It affects both initial eligibility and ongoing benefit status. Individuals considering returning or increasing their work hours should know how their earnings may impact their benefits. If you have questions about how SGA applies to your situation, it’s best to consult with a qualified disability attorney.

Speak to a Disability Attorney to Ensure Claims Success

When you work with a disability lawyer, you’ll have a better chance of submitting an SSDI claim successfully. Learn about your rights by hiring an attorney. Make an informed decision and proceed with confidence. Call a disability lawyer now.

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